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[Broadband]| Monday 5th February 2007 |
In an interview with the Financial Times, Disney CEO Bob Iger revealed that contrary to industry concerns, digital sales have not adversely affected DVD purchases. Both Cars and Pirates of the Caribbean: Dead Man's Chest are available through iTunes and are also seeing record DVD sales, with the latter set to become the best-selling disc ever.
Hollywood studios are said to be concerned that if they release titles through iTunes, they will face retaliation from leading DVD retailers such as Wal-Mart. Wal-Mart has denied the allegations, although along with Target it is thought to be pressing for lower wholesale prices.
But Iger told the FT that rather than cannibalising DVD sales, downloads are expanding the market.
The message that we deliver ... is that the pie is getting bigger,' Iger said.
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The FT says that Disney's experience will increase the pressure on other Hollywood studios to strike deals with Apple. However that conclusion is given short shrift on CNN Money's Business 2.0 blog.
'So much pressure that Apple has only signed up one other studio, Paramount, in a deal that includes no new releases, only a bit over 100 back-catalog films, which is great if you're really dying to watch Zoolander,' wrote Owen Thomas.
Even if Disney's iTunes sales doubled every quarter, he noted, they would still add up to less than one per cent of the company's annual income.
'iTunes sales aren't going to make a material difference in Disney's financials, and they're not anywhere near a size where other studio chiefs would feel "pressure" to sign on,' he wrote.
Certainly there does not seem to be sufficient pressure for the other studios to drop their concerns about what they perceive to be the lax restrictions imposed by Apple's DRM, which permits downloaded content to be played on up to five iTunes-authorised devices (computer, iPods and Apple TV) at any time.
The recalcitrant studios believe that while this may be acceptable for music, it is too liberal for movies.
One unnamed executive said last month that Apple's terms 'scare the heck' out of Hollywood, which, according to BusinessWeek, equates every movies copied to another device as a lost DVD sale.
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